FMO (NEDFIN) INVESTOR PRESENTATION THE DUTCH DEVELOPMENT BANK - - PowerPoint PPT Presentation

FMO (“NEDFIN”) INVESTOR PRESENTATION

THE DUTCH DEVELOPMENT BANK April 2016 www.fmo.nl

I. About FMO 3 II. Strong Backing by the State 5 III. Investment Approach 9 IV. Financials & Risk Management 14 V. Liquidity Management & Funding 23 VI. Contact 28 VII. Appendix 30

CONTENTS

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• I. ABOUT FMO

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• The international development bank of the Netherlands - incorporated in 1970
• Promoting sustainable private sector growth in developing markets focusing on

green and inclusive development

• Strong backing by the State of the Netherlands
• AAA (Fitch), AAA (Standard & Poor’s) credit ratings and industry leading

sustainability ratings

• Licensed bank supervised by the Dutch Central Bank
• FMO is an eligible issuer under the Public-Sector Purchase Programme of the ECB

4

WE EMPOWER ENTREPRENEURS TO BUILD A BETTER WORLD

4

FMO AT A GLANCE

• II. STRONG BACKING BY THE STATE

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Shareholders (per December 31, 2015)

• Public Private Partnership
• The State owns 51% of the shares (A shares). Private sector entities own 49%
• f the shares (B shares)
• Voting rights for A shares and B shares are equal. A shares may only be issued

to the State

• The State has an economic interest of more than 90% of shareholders’ equity

DUTCH STATE IS MAIN PROVIDER OF CAPITAL

51% 42% 7% Dutch State Dutch banks: ABN AMRO, ING, Rabobank Trade Unions, Employer's Federations, Companies, Individuals

* Other components comprise of available for sale reserve, translation reserve, other reserves and undistributed profit, and minority interest. Differences may arise due to rounding

Shareholders’ equity (in EUR mln, per December 31, 2015)

6 1,308 658 545 Contractual Reserve Development Fund Share Capital, Share premium reserve and Other Components*

• Explicit support agreement*
• Documented in the bilateral “Agreement State –

FMO of 16 November 1998”**

‒

• Art. 7: Maintenance Obligation:

The Dutch State is committed to covering all losses from operations that cannot be covered by general or specific provisioning and reserves

‒

• Art. 8: Financial Security Obligation:

The Dutch State shall prevent situations arising in which FMO is unable to meet its commitments on time

• Valid for an indefinite period and may be

cancelled subject to a twelve-year notice period

*) http://www.rijksoverheid.nl/documenten-en-publicaties/notas/2013/10/18/nota-deelnemingenbeleid-rijksoverheid-2013.html **) This is a synopsis of the actual text. The State Agreement should be fully read for a complete understanding. A full copy of State Agreement available at www.fmo.nl

EXPLICIT DUTCH STATE SUPPORT

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• Off balance sheet funds for risk of the Dutch Government to finance high risk projects
• MASSIF: EUR 562 mln
• Resources for financial institutions to aid the development of Micro, Small and Medium-sized Enterprises

(MSMEs)

• Infrastructure Development Fund: EUR 521 mln
• Long-term financing for infrastructure projects
• Access to Energy Fund : EUR 81 mln
• Private sector projects that create sustainable access to energy services

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FMO MANAGES EUR 1,194 MLN IN GOVERNMENT FUNDS *)

* Committed per Dec. 31st 2015; includes FOM-OS of EUR 30 mln

• III. INVESTMENT APPROACH

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By supporting financial institutions, FMO paves the way for financing SMEs, micro- enterprises and individuals as well Access to affordable energy is not just essential for everyday living – it can also empower those who use it Achieving long term sustainability in global agribusiness production requires large investments targeted at improving farming practices, increasing yields and reducing waste High-impact initiatives from other sectors can also benefit from FMO’s services, expertise and global network

*Based on committed investment portfolio, excl. government funds, of EUR 8.1 bln per Dec. 31st , 2015

FOCUS ON SECTORS WITH HIGHEST LONG-TERM IMPACT

38% 23% 31% 8% Financial Institutions Energy Other Agribusiness

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PROVIDING LONG TERM FINANCING

• Broad range of financing products
• Third party financing through FMO Investment

Management and syndicated loans

• Private equity:

―

Fund investments, co-investments with funds and direct investments in focus sectors

―

Typical holding period 5 – 10 years

13% 78% 9% Euro USD Local currency 29% 55% 3% 13% Equity Loans Guarantees Mezzanine 64% 36% Private equity funds Direct investments

Investment portfolio per product* Private equity portfolio (per Dec 31st 2015)

* Based on committed investment portfolio, excl. government funds, of EUR 8.1 bln per Dec 31st 2015

Investment portfolio per currency*

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INVESTMENT PROCESS

Front Office Decision Clearance in Principle Term Sheet Due Diligence Finance Proposal Credit Advice MB Decision CR Decision IC Decision IC Advice Annual Review Provisioning SO Fair Value Credit Advice IRC / CR Decision

Changes

Credit Advice CR Decision Credit Advice Contract Disbursement 12

INTEGRATED ESG APPROACH

FMO believes that long-term profit and viability must go hand in hand with enduring economic and social impact.

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SUSTAINABLE INVESTMENTS

Economic Impact

• Consistent profitable

growth

• Shareholder value
• Risk management

Social Impact

• Diversity
• Human rights
• Health & safety
• Community relations
• Equal opportunity
• Respect for

individuals Corporate Governance

• Board structure and

accountability

• Internal controls, audit and

risk management

• Conflicts of interest and

related party transactions

• Accounting and disclosure

practices

• Independence of external

auditors Environmental Impact

• Resource efficiency
• Energy efficiency
• Biodiversity
• Emissions to air
• Global energy issues
• Water/Chemical usage

• IV. FINANCIALS & RISK MANAGEMENT

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STEADY PORTFOLIO GROWTH

1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Committed portfolio* 2,059 2,216 2,765 3,543 3,877 4,566 5,046 5,450 5,789 7,065 8,062

* Committed portfolio excludes government funds; CAGR: Compounded Annual Growth Rate

Portfolio development 2005 – 2015 (in EUR mln)

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PROFITABLE THROUGHOUT THE CRISIS

• 150
• 100
• 50

50 100 150 200 250 300 350 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Income 134 202 199 210 166 225 238 271 254 260 320 Value adjustments 8 6

• 36
• 124
• 52
• 29
• 59
• 46
• 18
• 51
• 29

Net Profit 73 134 105 48 60 126 93 146 133 124 174

Income composition (in EUR mln)

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• Per Dec 2015 approx. 600 counterparties with approx. EUR 15 mln average exposure **)
• Credit ratings reflect counterparty credit quality
• Internal credit ratings are mapped versus Moody’s
• Collateral is acquired on 29% of the gross loan amount

5% 43% 40% 12% 4% 41% 41% 13% 6% 40% 38% 16%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% BBB- and higher BB-, BB, BB+ B-, B, B+ CCC+ and lower ratings Dec-13 Dec-14 Dec-15

DIVERSIFIED BELOW INVESTMENT GRADE PORTFOLIO

*) Gross loan portfolio excluding government funds (disbursed) **) Number of counterparties and exposure relate to the gross loan portfolio

Portfolio breakdown per credit rating*

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• Recent increase in NPL’s due to country and counterparty specific events
• Low write-downs as a result of active management and focus on recovery

13.6% 12.4% 8.1% 6.0% 4.9% 5.8% 6.8% 6.9% 1.1% 3.6% 2.3% 3.4% 3.5% 4.1% 3.2% 3.8% 0.3% 0.4% 0.2% 0.6% 0.5% 0.1% 0.5% 0.6%

0% 2% 4% 6% 8% 10% 12% 14% 16% 2008 2009 2010 2011 2012 2013 2014 2015

NPL % of portfolio Principals with arrears > 90 days Write offs % of portfolio

RECENT GRADUAL INCREASE IN NPL’S; LOW WRITE-OFFS

Non-performing loans development

* NPL %: loans value adjusted and loans not value adjusted but past due more than 90 days as % of the gross loan portfolio excluding government funds (disbursed)

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• Value adjustments on loans consist of:

― Counterparty-specific value adjustments ― Group-specific value adjustments

BACKED BY CONSERVATIVE PROVISIONING

Loan provisioning

1.1% 3.6% 2.3% 3.4% 3.5% 4.1% 3.2% 3.8% 12.1% 12.5% 11.6% 11.0% 10.4% 9.2% 8.4% 7.8%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 2008 2009 2010 2011 2012 2013 2014 2015 Principals with arrears > 90 days Value adjustments

* As % of the gross loan portfolio excluding government funds (disbursed)

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• Exposure spread over more than 85 countries
• 10 largest country exposures represent approx. 1/3 of the total portfolio
• Country limits based on country ratings and FMO’s capital base
• Sector limits capped at 50% of country limit

WELL DIVERSIFIED GLOBALLY

0% 1% 2% 3% 4% 5% 6% 7% 8% Other Agribusiness Energy Financial Sector

* Based on committed investment portfolio of EUR 7.6 bln as per June 30th, 2015 excl. government funds and loans guaranteed by the Dutch State

Portfolio breakdown per country and sector

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EUR 8.1 BLN OF INVESTMENTS AROUND THE WORLD *) (Dark)

No requirement for a relation with Dutch businesses

NON SPECIFIC REGION LATIN AMERICA & THE CARIBBEAN AFRICA ASIA EASTERN EUROPE & CENTRAL ASIA €2.3 BLN €1.9 BLN €0.5 BLN €1.1 BLN €2.3 BLN * Per Dec 31st, 2015. Committed portfolio excl. government funds and loans guaranteed by the Dutch State

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SOLID CAPITAL BASE

• Risk Weighted Assets (RWA) = EUR 10.2 bln. (Dec-15)
• Over 95% of net profit is retained
• The Regulatory Capital Ratio is based on a 99.9% confidence level (A level)

Regulatory Capital Ratios 2011 – 2015

29.4% 29.0% 27.7% 21.3% 22.9% 26.7% 26.1% 24.7% 21.3% 22.9%

0% 5% 10% 15% 20% 25% 30% 35%

2011 2012 2013 2014 2015

BIS ratio Core Tier I ratio Shareholders' equity / Total assets 22

• V. LIQUIDITY MANAGEMENT

& FUNDING

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LOW RISK LIQUIDITY PORTFOLIO

• To meet conservative liquidity requirements
• Short term investments
• Long term bond portfolio:
• Fair value of EUR 612 mln (Dec-15)
• Buy and hold
• ECB-eligible
• Liquidity Coverage Ratio (LCR) of 317%
• Net Stable Funding Ratio (NSFR) 122%
• Positive and negative ESG screening

Bond portfolio by country

36% 26% 12% 7% 9% 3% 7% Netherlands Supra Germany Belgium Finland UK France

Bond portfolio by rating*

63% 37% AAA AA

* The lower of Moody’s and S&P is used

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• Funding need of EUR 1.0 to 2.0 bln p.a.
• Funding secured though demonstrated

market access as SSA borrower

• Public markets and private placements
• Focus on USD and EUR funding
• Duration matching (3Y – 5Y)

― Max. tenor 12 years

• Sustainability Bonds to finance:

― Green projects ― Inclusive finance projects

• FMO is an eligible issuer under the Public

Sector Purchase Programme of the ECB

Funding per Currency Feb-16 Redemption profile Feb-16

8% 5% 44% 5% 1% 37% AUD CHF EUR JPY NZD USD 500 1,000 1,500 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026

FUNDING STRATEGY: DEMONSTRATED MARKET ACCESS

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• Industry leading Sustainability Ratings

―

Sustainalytics

―

Oekom Research

• Member of the Green Bond Principles (GBP)

―

Use of proceeds reporting via Sustainability Bond Newsletter https://www.fmo.nl/susbonds

―

IFI working group on Green Bond Impact reporting harmonization

―

Project disclosure on FMO world map: https://www.fmo.nl/map

• External assurance to confirm alignment with GBP
• Sustainalytics’ 2nd opinion on FMO Sustainability Framework
• Sustainalytics’ review of eligible projects
• KPMG: use of proceeds (financial perspective)
• FMO awarded First Green Bond – Netherlands certificate

by Climate Bond Initiatives (partnership per Feb-16)

KEY FEATURES SUSTAINABILITY BONDS

26 241 626 133 Available funding Disbursed, green Disbursed, inclusive

Sustainability Bond allocations in EUR million (per Dec 31st 2015)

Year Amount Tenor 2013 USD 500 mln, 1.50% 12/02/2018 5 year 2014 USD 500 mln, floater 12/06/2017 3 year 2014 USD 500 mln, floater 21/10/2019 5 year 2015 USD 500 mln, floater 24/08/2016 1.5 year 2013 EUR 500 mln, 1.25% 13/11/2018 (Sustainability) 5 year 2015 EUR 500 mln, 0.125% 20/04/2022 (Sustainability) 7 year 2015 EUR 500 mln, 0.125% 04/11/2020 5 year 2012 JPY 20 bln, 0.86% 02/03/2017 5 year 2009 CHF 250 mln, 2.875% 19/07/2016 7 year 2010 CHF 100 mln, 1.755% 10/03/2017 7 year 2014 AUD 100 mln, 4.75% 11/09/2024 10.5 year 2014 AUD 70 mln, 5.00% 05/05/2026 12 year 2014 AUD 380 mln, 4.25% 08/07/2025 11 year 2014 NZD 100 mln, 4.75% 16/10/2019 5 year

BONDS OUTSTANDING

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• VI. CONTACT

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Anna van Saksenlaan 71 P.O. Box 93060 2509 AB The Hague The Netherlands www.fmo.nl BB ticker: NEDFIN

FMO’s legal name is ‘Nederlandse Financierings-Maatschappij voor Ontwikkelingslanden N.V.’ FMO is also known as the Netherlands Development Finance Company

Matthijs Pinxteren Director Treasury Direct +31 70 3149575 E-mail m.pinxteren@fmo.nl Arthur Leijgraaff Senior Treasury Officer Direct +31 70 3149852 E-mail a.leijgraaff@fmo.nl

CONTACT INFORMATION

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• VII. APPENDIX

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FINANCIAL OVERVIEW

Balance sheet (EUR mln) 2009 2010 2011 2012 2013 2014 Jun-15 Net loans 1,942 2,269 2,585 2,817 2,981 3,860 4,205 Equity investments portfolio 1 531 688 795 914 962 1,149 1,409 Shareholders' equity 1,327 1,514 1,665 1,815 1,963 2,138 2,394 Debt securities and debentures/notes 2,180 2,365 2,679 3,292 3,610 4,197 5,105 Total assets 3,772 4,305 5,059 5,564 6,184 7,088 8,395 Committed investment portfolio 2 4,598 5,292 5,874 6,281 6,633 8,013 8,778

• f which are government funds 3

721 726 828 831 844 978 1,048 Profit and loss account (EUR mln) Income Net interest income 109 133 147 154 155 169 112 Income from equity investments 27 52 46 89 43 72 22 Other income including services 30 40 45 28 56 19 33 Total income 166 225 238 271 254 260 167 Expenses Operating expense 52- 50- 52- 57- 62- 62- 37- Operating profit before value adjustments 114 175 186 214 192 198 130 Value adjustments

• to loans and guarantees

46- 18- 23- 23- 4 36- 9-

• to equity investments

6- 11- 36- 23- 22- 15- 5- Total value adjustments 52- 29- 59- 46- 18- 51-

• 14

Share in the results of subsidiaries & associates 1- 5 9- 4 5- 2 3 Profit before tax (including results from subs./ass.) 61 151 118 172 169 149 119 Taxes 1- 25- 25- 27- 36- 25- 21- Net profit 60 126 93 145 133 124 98

1) Including associates. 2) Committed investment portfolio concerns both investment for FMO's account and for government funds managed by FMO. 3) The government funds include Massif, Infrastructure Development Fund, Access to Energy Fund and NIMF (until 2007).

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• Rated Aaa/AAA/AAA
• Wealthy, diversified, competitive economy
• Strong reputation of fiscal discipline
• One of the best funded pension systems in the world
• Debt to GDP ratio and budget deficit among the lowest

in Europe

• Economic growth turned positive since 2014 and

unemployment remains low

Source: Dutch National Bureau for Statistics

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OVERVIEW OF THE NETHERLANDS

171.0 134.6 130.5 108.7 99.4 99.3 97.0 85.3 71.9 66.3 61.2 0.0 50.0 100.0 150.0 200.0 Greece Italy Portugal Belgium Ireland Spain France Austria Germany Netherlands Finland

2015 Q3 2014

Source: Eurostat

EMU – Debt (%GDP)

• 5.6%
• 5.1%
• 4.3%
• 4.1%
• 2.3%
• 2.6%
• 2.2%
• 6%
• 5%
• 4%
• 3%
• 2%
• 1%

0%

2009 2010 2011 2012 2013 2014 2015

Budget deficit (%GDP)

Source: Dutch National Bureau for Statistics

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DEBT TO GDP RATIO AND BUDGET DEFICIT

6% 6% 7% 8% 9% 9% 10% 11% 12% 21% 25% 0% 5% 10% 15% 20% 25% 30% Austria Germany Netherlands Belgium Finland Ireland France Italy Portugal Spain Greece

Unemployment 2015

Source: Eurostat Source: Dutch National Bureau for Statistics

3.4% 3.9% 1.8%

• 3.7%

1.5% 0.9%

• 1.2%
• 0.8%

0.8% 1.9%

• 5%
• 4%
• 3%
• 2%
• 1%

0% 1% 2% 3% 4% 5%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Nominal GDP growth YoY

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OVERVIEW OF THE NETHERLANDS

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ECONOMIC GROWTH POSITIVE SINCE 2014

CLICK TO EDIT MASTER TITLE STYLE

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Disclaimer The information used in this document is strictly confidential. By acceptance of this document, the recipient agrees to keep the information in this document confidential to such person. The information is neither to be disclosed to any other person, nor copied or reproduced in whole or in part, without the prior written consent of Nederlandse Financierings- Maatschappij voor Ontwikkelingslanden N.V. (“FMO”). The distribution of this document in certain jurisdictions may be restricted and accordingly persons into whose possession this document may come are required to have themselves informed of and to observe any such restrictions. This document is intended to present general information and does not constitute an offer for, or an invitation to subscribe to or acquire, any interests in one or more investment funds and does not constitute investment advice.

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